In their most recent earnings report, Albemarle Corporation, the largest US-based lithium mining company, is projecting their first positive cash flow numbers since 2022, despite an ongoing bust in lithium prices.
The company’s 2025 projections now include $300 or $400 million in positive free cash flow, whereas at the beginning of the year the company was predicting just breaking even. Albemarle brought in $1.3 billion in revenue during their third quarter, down just slightly from $1.4 billion a year earlier. The company saw an overall loss of almost $150 million in net income and diluted losses per share at $1.72, compared with an overall loss of $177 million in net income and diluted losses per share at $1.96 in the third quarter of last year.
Albemarle’s positive cash flow projections, along with a steadily growing lithium yield are the surprisingly fast results of major cost-cutting efforts, including shuttering multiple projects, reassuring investors of the company’s ability to adapt to a volatile market.
“The thing that stood out to me is just how quickly they’ve been able to implement cost-cutting and free up their cash flow,” said Seth Goldstein, a senior equity analyst at Morningstar.
The outlook for Albemarle lately has been bleak, and the company was forced to raise equity twice in the last five years to fund the development of multiple projects it has since abandoned.
Albemarle has been able to free up the cash on their balance sheet in multiple ways, primarily by abandoning multiple large-scale development projects. Another significant factor included the sale of some or all of the company’s stake in two catalyst businesses. Thanks to those pullbacks and selloffs, the company went from $1.7 billion in capital expenditures last year to just $600 million in the third quarter.
Albemarle has thus far managed to maintain growth in lithium production. And while lithium prices are currently stuck at low levels due to oversupply, with demand for lithium once again outpacing production, producers are optimistic that prices will begin to rise by the end of 2026. Factoring into those optimistic outlooks are the multiple data centers proposed by the world’s largest tech companies in the past year, all of which will require lithium based energy storage.
The company’s stock continued to climb in the days since their earnings announcement, closing on Friday up 6.5%, at $97.18 per share, compared to the overall NASDAQ, which closed at -0.2% on the same day. Stock then rose 13% in the four days following their earnings report, up to $103.88.
Nonetheless, the company is holding on to some less profitable assets, notably their open pit mine in Australia known as Wodgina. Now the question remains: will they continue to downsize or will they hold on to an asset that’s losing money?
“They still have this third high cost resource, Wodgina, in Australia, that really isn’t as profitable or as low on the cost curve as your other two resources. And they have to figure out what to do with that over time,” said Goldstein.
When asked about future ownership of the Wodgina project by shareholders, CEO Kent Masters declined to give details, but responded, “We’ll see. That has to play out.”